Ex-MATC manager was warned on questionable credit card use

Red flag raised in 2009, but spending continued, audit finds

Kristin Seimits was warned in 2009 about questionable use of her Milwaukee Area Technical College credit card.

But the former MATC procurement manager's fraudulent spending continued unchecked, and dramatically ramped up, until she had embezzled about $259,000 in goods and services over seven years, according to a fraud investigation by an outside auditor completed this month.

The investigation by Titus group revealed no evidence that other MATC employees were involved, had knowledge of the fraudulent transactions or were committing a similar type of fraud.

The MATC Board of Directors is to discuss the report at its regular meeting at 5 p.m. Tuesday.

Seimits faces two felony charges of theft exceeding $10,000.

Investigators say her purchases included a car, a wedding trip, vacations, laptop computers, iPads, entertainment, home remodeling, home furnishings, groceries and athletic/sports items charged to MATC between 2005 and 2011.

Seimits hid personal purchases in 15 different MATC department budgets, according to the audit. She hid the largest purchases in multimillion-dollar capital projects funds. By the time she was caught, her fraudulent spending was averaging $10,700 per month, the investigation found.

Seimits, 44, resigned from MATC in September after being placed on unpaid administrative leave a few weeks earlier. Hired in 2003, she was earning a salary of $90,217.

James Williams, her supervisor from July 12, 2010, until she resigned, is still vice president of finance. He reports to MATC President Michael Burke.

Williams and Burke were unavailable for comment Monday.

Her previous supervisor, Michael Sargent, retired in 2010. He declined to comment when reached by telephone.

An estimated $128,000 in fraudulent purchases occurred between June 15, 2010, and the time Seimits left MATC, according to the report. Seimits did not submit any credit card receipts or supporting documentation after June 15, 2010, under Williams' watch.

Warning in 2009

A red flag had been raised in July 2009 - before Williams and Burke arrived at MATC. Management identified "suspect purchases" from 2008 and 2009 and questioned Seimits, according to the report.

She admitted that she gave her MATC credit card number to other employees to make purchases, against rules she developed for the program when she started it in 2005.

She received a written warning.

"Her supervisor at the time was to work on a redesign of the program to make sure she was following the program correctly," MATC attorney Janice Falkenberg said.

MATC did not consistently apply its reprimand policy for misuse of credit cards, according to the Titus investigation. That policy says credit card misuse will result in revocation of privileges and other disciplinary action, up to and including firing.

"Despite these clear guidelines, we saw no evidence that identified misuse resulted in appropriate reprimands," the report says. "By not having an effective reprimand system in place, control violations, circumvention of controls and unapproved use is considered tolerated and will persist."

Seimits ostensibly designed the MATC credit card program to make purchasing more efficient, and to allow the college to earn rebates from its credit card company, U.S .Bank, for volume purchases.

The investigation revealed fraudulent charges began almost immediately after the credit card program started, Falkenberg said.

Other employees were trained for correct use of the credit cards after Seimits received her warning in 2009, but Seimits continued her personal spending with no one closely monitoring her activity, according to Falkenberg.

The audit report details how the embezzlement went undetected for years, and ramped up after her 2009 slip-up.

According to the audit and Falkenberg:

Seimits set her own credit limit. By the time she was caught, the limit had reached $500,000 per month with no code restrictions that would automatically result in purchases being denied by a merchant or vendor. "No one knew her credit limit; she unilaterally changed the limit," Falkenberg said. Many other MATC credit card users also had no code restrictions, the report revealed.

Seimits had unlimited access as administrator of the credit card program, including the ability to authorize, record and reconcile transactions.

She maintained custody of all purchasing records and master data, which allowed her to hide improprieties. In some cases, she purchased items such as laptop computers and iPads for others. Those individuals reimbursed her, and she kept the money, Falkenberg said.

Significant transactions requiring approval by the vice president of finance either never were submitted for approval, were submitted with incomplete documentation, or were submitted with falsified or highly suspect documentation, the report said.

"She designed the program and she had full control over the program," Falkenberg said. "She set credit limits, had authority to reallocate charges (to other department budgets) . . . She was very savvy of where she could put things to hide them."

The alleged embezzlement was discovered last summer when the college's audit advisory committee requested internal audits of various MATC departments by an independent firm. The school does not have its own internal auditor; the internal auditor position has been vacant since October 2001. MATC does have an annual external audit.

Procedures changed

As a result of the fraud investigation, several changes have been made to the credit card program:

The new procurement manager does not have an MATC credit card. MATC is still able to make volume purchases because the procurement specialist, who reports to the procurement manager, has an MATC credit card.

"We're looking at all people who have a credit card and what their limit should be. We are segregating duties, developing better guidelines for spending and revamping the entire (credit card) program," Falkenberg said. At the time of the investigation, 183 employees had MATC credit cards. Now, about 175 employees have them. A majority of those with an MATC credit card have a biweekly spending limit of $500, the audit states.

Now, both the procurement manager and vice president for finance must authorize any change in a cardholder's credit line, Falkenberg said.

MATC staff also will review statements from U.S. Bank for suspicious credit card purchases and patterns of suspicious purchasing, she said.